Italian bonds are bid to start the week, catching a bit of relief after Giorgia Meloni, the frontrunner for the next prime minister based on latest sentiment, said that she would abide by EU budget rulings. That at least is providing some comfort to bond investors, amid fears that the election will see Italy further distance itself from the EU.
2-year yields are down 9 bps to 1.319% currently and we are seeing the yields spread between 10-year Italian and German bonds narrow to 222 bps. For some context, it was as high as 262 bps at the end of last week.
